one other thing that i think plays into this is that poker players constantly deal with society ****ting on them. a good 80% of people don't understand or respect what they do for a living.

owning a home has become, for better a worse, a common way to show society that you've "made it." they even call it the American Dream. i think poker players that have the means to buy a home are often swayed by their desire to make it clear to others that they are doing great.

i would suggest at least keeping this in mind throughout your decision process. in the end, maybe it is an important factor to you, it's just worth making sure you're aware of all the reasons you're doing something.

Great posts, Taylor.

I bought a home for, in hindsight, all the wrong reasons and what a lapse in judgement that was. I ignored my gut(was about to get married at the time) and just went through a short sale. Took almost 2 years to get rid of it. Massive headache.

Read Taylor and Coles posts, and keep reading them until they sink in.

I was extremely close to buying a place in 2010 -- as far as putting down a deposit and knowing exactly what furniture I was getting.

I was very grateful that Taylor helped convince me that it was a bad move, mostly for the freedom and flexibility to move around and live wherever I wanted.

I also think that if you know that it's only +EV to stay in a house for 5+ years, you might then force yourself to stay for those years even when your true interests would lead you elsewhere.

Selling 1 drop action at 1.05. Will offer some kind of kickback if you can set me up with someone willing to buy a large piece.

I would never buy a home on Earth. We will be able to live on the Moon soon enough. #waititout

I'll go ahead and disagree with some of the comments ITT.

There is no better feeling than owning your own home. Making your own stamp on a place, and really have something to show for your poker achievements. Kanu you have been extremely successful. What do you have to show for all the money you have earned? Or is it just a figure on a bank balance earning next to no interest in a UK bank?!

Bricks and mortar are historically such a sound investment and not a huge hassle once you are all moved in. Yes you can have problems if stuff goes wrong, but that often comes down to the type of place you buy. I live in the UK, interest rates are extremely low and to earn more than 2% you have to lock up your money for 5 years or spend a decent amount of time effort to find good investments.

Being liquid is very important, and I'd never have such a high % of my net worth on the line that I can't play the games I want, but I would think strongly about happiness EV with this one. It feels great to own a property.

This is massive fish logic -> needing to own a home to show his success.

You should determine the type of lifestyle you want to live and do a calculation of whether this point in time it's better to rent vs home. Keep in mind there's an inverse relationship for interest rates and home value. It would be great to lock in cheap financing but if you plan to move around or sell you might lose more on the resell.

If I wire into rio cage how big of a hassle will it be to take cash in order to play at aria or something?

First, I agree with cts about renting vs. owning. Owning a home is overrated, probably because there is a ton of propaganda foisted on everyone about how great owning a home is. Obviously there are plusses to owning, but for a ~30yo grinder with no kids and no 100% clear path laid out for the next five or ten years, I don't think they outweigh the benefits of renting. If you step back and think about it philosophically, we're all just renting our time on Earth and the molecules that make up our bodies anyway (Krantz's opinions on Moon property notwithstanding), so that should factor into our analysis of what is and isn't +EV.

As for your investments question, it's super easy to invest in an index fund that has very low fees. Yeah, maybe some managed funds will beat them, but index funds are the simplest, most worry-free way to invest in the stock market that I have found. Trying to outperform them on your own is a full-time job IMO, and I doubt managed mutual funds will show the same returns in the end after all the fees are taken into account. Vanguard seems to be the gold standard for nitty index fund investing.

You can also find great financial and investment advice here.

your main point is basically that the happiness EV is a bigger factor in buying than the EV on your money. there's no way someone can argue against that, it's up to each individual to decide how much both sides of the equation mean to them.

i bolded a part of your post that is false based on my personal experiences and understanding of what the typical successful poker player would define as a "huge hassle." it's not really worth derailing the thread over the details, but if anyone is unsure about whether you should buy or not, please ask some homeowners about the maintenance / hassles that can go into owning.

also, if anyone wants to shoot me a PM with questions or thoughts on the matter i'd be happy to discuss it. i wouldn't by any means call myself an expert on the topic, i just enjoy thinking and talking about it.

careful if you PM taylor, he could just be trying to snatch all your insights and then not respond

even living in a basically free, fairly new (2005) house on my own, i would agree with this as well.

+1

I very recently looked into this and came to the same conclusion. A good resource (for me as a n00b at least) was this site: http://michaelbluejay.com/house/rentvsbuy.html

Super cliffs are that, historically, real estate appreciation rates track inflation and earn an extra ~15-20% over inflation over the past 30 years. That figure counts the money that gets put into a home (but of course does not count the money saved due to charging rent and/or not paying rent oneself), and does not count the any of the (large) transaction costs it takes to buy or sell a home. Ends up the breakeven point is around 5 years usually.

Add to this that being a pro poker player contains a lot of both good and bad unknown unknowns, and absurd ROI/year from playing poker with our bankroll, and it becomes pretty fishy to be buying real estate IMO.

For some reason being a homeowner has a huge grip on people's imagination, and it's seen as being an important milestone in one's life by a lot of people. But considered objectively as an investment it really isn't a great idea when weighed against more liquid alternatives. It's honestly probably better to just have a bunch of cash hoarded away in various places so that if a friend texts and asks if you want X% of some super soft live game you can say yes always.

great posts and I agree with most of it.

to be fair however, a lot of people go broke and it is a hell of a lot harder if you own a house to be properly broke, and it also allows the defensive position of simply living in your house while you intern or develop new skills etc, provided you are actually in a place with reasonably large population. in this i am speaking only of actually owning the whole house or close to it (say around 60%+, but pref all), and buying fairly modestly, a functional single family shelter in an area with a reasonable population and possible employment prospects in a wide variety of fields, that can be rented at an ok rate relative to cost of investment, if one decides to go into real estate in a small way in the future (a third income in a family situation for example, allows one to grow exponentially across a life span while still working in a middle class career).

You can argue objectively that you could just use the money (say 300k) from the house to rent in this scenario instead, but it is not really the same thing. A lot of the time, especially for mid stakes players, it would be way better for them to own their own house, and think they only have 40k to play poker with, as they certainly should not be living a life style of someone that has 300k of liquid cash- their financial situation is actually quite dire if they do not have any employable skills.

Furthermore, when things are going great, it is nice to have **** loads of money accessible to do whatever the hell you want, but that's not necessarily a good life strategy, making yourself artificially poor then doing whatever you can to make it work is one of the best life strategies, since almost no one is frugal enough (and it is much more fun to be frugal when you don't have a pile of money sitting there telling you you should live a little more extravagently).

The older i get the more i realise fairly large financial swings from employment and investments are fairly normal for pretty much everyone. Being able to work in a job which you make no money when you bust because you have free rent is a pretty good spot to be in. I know you can have that money put aside anyway, and I know you can bust with a house, but I have never sold a house to spend the money on frivolous things.

Also if you are planning to not play poker and learn something new, or even to play poker but not at astronomical stakes, and you want to be in a relationship / have kids, there is a big difference between sitting around your house all day, and sitting around a house your renting all day with your pile of money. You've already brought something to the table that has use to others. A pile of money doesn't really count to anyone in the real world, even though it should.

In closing I feel like most the people who say don't get a house had life work out for them great in the 5 years they owned it and so it was a tiny bit worse than not buying a house. But if they had gotten dealt a really bad hand after purchasing the house, I bet they would say, like I have heard many people say, "At least i'm glad i bought this house when I was flush, i'd really be struggling now without it". Basically it is the most fundamentally useful thing you can put your money into, hence the appeal. You have no need to sell the asset unless your life is on an upswing and you want to upgrade.

great posts and I agree with most of it.

to be fair however, a lot of people go broke and it is a hell of a lot harder if you own a house to be properly broke, and it also allows the defensive position of simply living in your house while you intern or develop new skills etc, provided you are actually in a place with reasonably large population. in this is speak only of buying a house that you own outright or close, a reasonably priced single family shelter, that you can rent out an ok rate if you want to get into real estate at some stage in the future for a third income. this gives you the option of working a middle class career and still having exponential financial growth avenues if you want to do the legwork.

You can argue objectively that you could just use the money from the house to rent in this scenario instead, but it is not really the same thing as you will not realise you are in dire financial situation when you have 300k in cash still, it is hard to be truly that objective.

A lot of the time, especially for mid stakes players, it would be way better for them to own their own house, and think they only have 40k to play poker with, as they certainly should not be living a life style of someone that has 300k of liquid cash as their financial situation is actually quite dire if they do not have any employable skills and are reaching their 30s.

Furthermore, when things are going great, it is nice to have **** loads of money accessible to do whatever the hell you want, but that's not necessarily a good life strategy, making yourself artificially poor then doing whatever you can to make it work is one of the best life strategies, since almost no one is frugal enough (and it is much more fun to be frugal when you don't have a pile of money sitting there telling you you should live a little more extravagently).

The older i get the more i realise fairly large financial swings from employment and investments are fairly normal for pretty much everyone. Being able to work in a job which you make no money when you bust because you have free rent is a pretty good spot to be in. I know you can have that money put aside anyway, and I know you can bust with a house, but I have never sold a house to spend the money on frivolous things.

Also if you are planning to not play poker and learn something new, or even to play poker but not at astronomical stakes, and you want to be in a relationship / have kids, there is a big difference between sitting around your house all day, and sitting around a house your renting all day with your pile of money. You've already brought something to the table that has use to others. A pile of money doesn't really count to anyone in the real world, even though it should. It is also very awkward to 'bring something to the table' with your pile of money (paying for luxuries etc) while simultaneously earning very little, whereas having the rent covered with your own home is the most natural thing in the world.

In closing I feel like most the people who say don't get a house had life work out for them great in the 5 years they owned it and so it was a tiny bit worse than not buying a house. But if they had gotten dealt a really bad hand after purchasing the house, I bet they would say, like I have heard many people say, "At least i'm glad i bought this house when I was flush, i'd really be struggling now without it". Basically it is the most fundamentally useful thing you can put your money into, hence the appeal. After a really nice piano, a house is probably the most useful thing you can put money into that you never have to sell. A tool that provides ongoing value. You can die with it and it will not have been a waste of money.

I agree that many people shouldn't buy a house, but in reality most people should look towards buying a house as they suck with money, saving, budgeting, etc. The other 5% aren't flawless, and like i mentioned above, large financial swings are actually quite common in peoples lives. It is really hard to end up in a terrible scenario if you just pay for your house outright and do not sell under any circumstances barring buying a replacement house- even if it devalued 90% and you worked retail you could get ahead. The only real negative is you could have to move to work which is very valid and the main argument against.

I’m surprised that there’s a lot of anti-owning a house. I’d guess the majority of posters with this sentiment are American poker players. Black Friday caused a lot of uncertainty and forced a lot of players to move abroad and this created major headaches for them.

However, if you’re entering your 30s and are ready to settle down and start a family, it makes sense to own a house, especially in the US with tax breaks and fixed 30-year mortgages [1].

With interest rate at historical low levels, a 30-year mortgage is a good hedge against inflation. The inflation for the past 30 years is 3.3% so if your mortgage rate is below that, you’re essentially getting paid to borrow money [2].

Inflation is likely to rise and hopefully, it doesn’t approach the level of the early 80s where your purchasing power decreases by 10% each year. That’s going to hurt if you have a lot of cash.

Additionally, adding real estate to your portfolio lower variance. If there’s one group of professionals that need to manage risk as they grow older, it’s poker players. Having said that, you can always buy REITs if you don’t own a house.

Also, the historical return for real estate is 7.3% so it’s not too shabby [3]. Of course, the S&P 500 returns 9.55% from 1928 to 2013 [4].

Lastly, and this seems underrated, you still need to live somewhere and your wife will likely want to own a home for security. Maybe the married folks can offer their advice?

In the end, everyone’s situation is different. I don’t know much about UK tax/mortgage laws to be much help. However, I’ve talked to Kanu a couple of times and he seems like he has everything together. Good luck.

[1] http://www.kiplinger.com/article/rea...omeowners.html
[2] http://www.multpl.com/inflation/table
[3] http://www.census.gov/construction/n...uspriceann.pdf
[4] http://pages.stern.nyu.edu/~adamodar...histretSP.html

Im with AlexiMartov here. Much easier to not spew away liferoll in lots of different ways if its in a house and not liquid.

Usually a low risk investment, that force people to save.

In a theory world where people act totally rational with their money I see more arguments for not buying but it seems like a safe route for some people.

I did buy a house this year (Norway) so I could be biased .

There might be something for said for not keeping your roll liquid, but I think people are arguing that the expense and inconvenience with owning a house are not to be underestimated. Insurance, taxes, fees, utilities, repairs all add up and can be quite significant. If the argument is for putting the money away, something like a fixed term low yield bond or something has much lower overhead.

The point that it's good to be frugal with your money is independent from the point that a house is a good investment. There are plenty of reasonable, illiquid investments, e.g., bonds, that you can put money into if you're not comfortable holding onto it.

Just re-reading everything and fully got your meaning second time round. I really like Taylor's post but I don't think it applies here because I'm not looking at it primarily as an investment. It's more that I would like to do it if it's not an awful idea rather than me deciding that I'm ready to invest in something and thinking that buying a house is an amazing financial decision that will make me loads of money. Given your quoted comment, you are prob aware of this anyway.

Thanks for all the discussion on it so far btw, has been very informative. I'm gonna keep re-reading it all and looking further into getting a loan against an investment portfolio to see if that's a good idea. What I have read so far on that suggests that getting an active manager for an investment portfolio provides a lower return on average than just tracking an index (due to the much higher fees).

One thing that I am noticing is that I often fit into the "unless" bracket where people say "buying a house is a bad idea unless...". For example:

"the exception, IMO, is if you are >80% sure that you'll stay in your home for at least 5 years. you also need to be equally as sure that your income level won't drop significantly (or that if it does you will have no problem 1. making payments and 2. "keeping your mind right" so you can keep playing good poker or make money in other ways)." from Taylor describes my situation.

So atm I am still planning to go ahead and buy although I may still change my mind after reading some more. Fwiw a lot of the good reasons not to buy that people have brought up are reasons that I haven't bought over the last few years when it would have been possible. It's definitely not the case that I have only just acquired the means to buy a house and am rushing into it because I have always wanted to get one asap with no thoughts as to how viable an idea it is. There are lots of good points being made that are making me question if I should wait even longer though. Will re-read some more and let you guys know what I go for in the end.

Tyty.

Owning your own home does Feel good, and will earn you praise from your social circle. If you think that is nonsense fish talk and worthless, you're kidding yourself. The value of that is different for everyone.

With that aside, you just need to calculate your b/e point for rent vs buy. Its probably going to be right about 5 years.

There is also portfolio diversification to take into consideration. If you're 100% cash/stocks/bonds, adding physical real estate (which is estimated to equate roughly 30-40% of total US assets) is a logical next step.

(Owning REITS does not = owning physical property as they have very different characteristics)

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if you don't think there is a good chance you will own for 5 years before you even buy the place, you shouldn't buy. many things will come up that make it more likely that you have to move (girls, investment or work prospects) on top of just feeling stationary in an area (sounds like you can see yourself getting bored of living where you're living in 5 years). the positive aspects socially, like owning your own home, don't really matter until you're thinking of getting married and such anyway. keep in mind also, that there is a good chance that you will own your own home, then have to sell for this reason, as your wife will reasonably want to help you pick out your house to live in.

it is pretty likely not to live in your own house for 5 years even if you have the intention of spending the rest of your life there these days, especially if you are single currently.

for what its worth, if you know nothing of investing in index funds etc, last time i checked a year or so ago, it seemed like you should just go on vanguard and buy their 2040 retirement fund, it will auto rebalance and has low fees. Then rent. Being able to own and store your own furniture is not going to be that amazing for you relative to the issues people have mentioned above. Being able to have a place for you to come home to (rather than putting your stuff in storage) while you travel is nice but keep in mind in this situation you are paying for the privilege as you have an asset sitting dormant.

Unless you have specific needs (having a man cave isn't really a reason to buy a home) that you need to renovate around you will lose more money. Then the question is, why are you renovating when your time horizon is so short. You won't break even on that unless that is your plan from the start, and then you are talking about a more investment minded approach where you probably need to know someone with handy skills etc who will work relatively cheap for you.

if you do buy, make sure the place is great to resell. It's the most annoying thing to think about since it is in polar opposition to the whole idea of buying a house, but stuff like your houses location relative to schools etc is very important even if your time horizon doesn't have you having children etc, since it will make resale easier.

I don't get this (the first part, the second part a bit maybe)

certainly curious to hear that point expanded on